What does subrogation mean in workers' compensation? In Iowa, subrogation means that the workers’ compensation insurance company has the right to recover compensation from a settlement or jury award that arose from a third-party injury claim, gross negligence claim or lawsuit. The insurer can recoup the amount it paid the injured employee who filed the workers’ compensation claim.
Although workers’ compensation is generally the exclusive remedy in most workers’ comp cases in Iowa, that isn’t always the case. If a third party outside the workplace contributed to the injury of an employee, Iowa law permits the injured victim to collect worker's compensation benefits and also file a lawsuit against the third party. This enables the worker to recover twice for the same injury. To prevent this from occurring, the law provides that the employer has the right to get paid back for the money it paid.
What Is Subrogation in Workers’ Compensation?
According to state laws, workers in all 50 states who are injured on the job are entitled to collect workers' compensation benefits for their workplace injuries. The majority of workers' compensation claims are filed to cover injuries that happen in the workplace while a worker is performing his or her normal work duties. Most on-the-job injuries are caused by workplace accidents, equipment malfunctions, electrical fires, hazardous chemicals, and co-workers. However, in some cases, injuries are caused by third parties who have no direct involvement with the workplace or the worker.
In such cases, injured workers are allowed to collect workers' compensation benefits when the third party caused the injury.
Is workers' compensation the only source of income after a work injury?
Under subrogation laws, injured workers have the right to file a worker's compensation claim, as well as a legal claim against the third party who caused the injury.
For example, if a worker is driving a company vehicle for work duties and is hit by another driver, the worker can file a workers' compensation claim with his/her employer and a legal claim against the at-fault driver and the driver's insurance company to recover damages.
The workers' employer can choose to sue the third party if the worker does not. Any money that the worker or his or her employer wins in a suit against the third party will be used to offset the workers' compensation benefits. In short, subrogation allows a workers’ compensation insurance company to recover the amount of money paid out in workers' compensation benefits to the injured worker.
Before pursuing a lawsuit against a third party, the worker or his or her lawyer must provide notice to the workers' compensation insurance provider of the intent to file and also obtain written permission from the provider to resolve for the proposed amount. Once the funds are recovered from the at-fault third party, the workers’ compensation provider has a right to recover the amount it paid on the workers’ compensation claim, less its share of attorney fees and costs.
Depending on the circumstances of the claim, it may be possible to compromise or reduce the amount of the third-party recovery that must be repaid to the workers’ compensation provider in satisfaction of its subrogation interest.
What Types of Workplace Injuries Might Involve Subrogation?
Any time an employee's job duties involve leaving the workplace to perform his/her required job duties, the worker is more vulnerable to accidents caused by third parties. Some of the most common injuries that involve subrogation include:
- Vehicle collisions
- Slip and fall accidents
- Falls and crushing injuries
- Dog Bites
- Physical assaults
- Robberies and thefts
Delivery drivers face significant risks of third-party injuries from a variety of circumstances including vehicle accidents, slip and fall accidents, dog bites, and robberies. The risk of injury from delivery jobs is often compared to similar job risks faced by police officers because many injuries are severe enough to send drivers to a hospital emergency room for immediate medical care. According to recorded incidents, delivering pizza is one of the most dangerous jobs in America. Over the last 10 years, many pizza delivery drivers have been robbed at gunpoint and killed for minimal amounts of cash.
Mail carriers face increased risks for third-party injuries from vehicle collisions, slip and fall accidents, animal attacks, and theft. From nips and bites to vicious attacks, aggressive dog behavior poses a serious threat to postal employees. According to USPS, there are more than 5,400 dog attack incidents on postal workers every year. Many result in severe wounds, infections, and the need for rabies shots.
Real Estate Agents
Real estate professionals who show homes for sale and hold open houses are exposed to property dangers including slip and fall accidents, dog bites from family pets, and physical assaults by strangers. Real estate agents routinely go in and out of vacant properties as part of their regular job duties. Vacant properties where electricity has been shut off create many potential dangers and high risks of harm for these workers.
Construction workers, roofers, painters, and landscapers are especially vulnerable to third-party injuries caused by slip and fall accidents and vehicle collisions. Due to dangerous outdoor work environments, falling from heights and being struck by moving vehicles often have severe consequences, including long-term health problems, permanent disabilities, or death.
Transportation and Roadside Workers
Transportation and roadside workers who work in highway and roadway work zones are exposed to a variety of on-the-job hazards that significantly increase their risks for severe injuries and death. According to the American Society of Safety Engineers, accidents in roadside work zones are a leading cause of death for workers every year. The National Highway Traffic Safety Administration reports the leading cause of roadside injuries and deaths in roadside work zones is motor vehicles and objects hitting workers. In 2015, more than 40% of roadside workers reported their work zones had been hit by a moving vehicle at least once during the year.
Transportation and roadside workers also face high risks of crush injuries. When vehicles hit barriers and/or equipment in roadside work zones, nearby workers often get pinned down and/or crushed by heavy equipment, moving machinery, falling objects, and debris. Crushing accidents are the third leading cause of fatalities to roadside workers, followed by collisions where vehicles run over or back into workers at high speeds.
When a worker is classified as an employee, the worker can file a workers' compensation claim with his/her employer, as well as a personal injury claim with a workers' compensation lawyer to recoup damages.
When work-related injuries occur, workers’ compensation insurance only covers a worker’s medical expenses and a portion of his or her lost wages during recovery and permanency benefits. However, filing a personal injury lawsuit allows compensation for other damages such as pain and suffering and emotional trauma. When injuries are severe enough to cause long-term illness, temporary or permanent disabilities, or loss of income, filing a personal injury lawsuit may offer better recovery options for damages.
Some workplaces hire third parties for repairs, maintenance, and company security. Certain types of businesses such as banks, hotels, casinos, nightclubs, jewelers, and high-end retail stores commonly employ third-party security companies for protection. These outside private security companies are paid to protect workers from harm that may occur in the workplace.
If the security company fails to provide adequate protection due to negligent actions, injury victims may be entitled to compensation. A third-party civil lawsuit can be filed for claims of negligence and breach of contract. Negligence may include claims of negligent hiring practices, negligent training practices, negligent supervision, and negligent retention.
Negligence plays a significant role in crossover third-party injury claims. When a work-related injury case involves the negligence of someone other than the employer, the injury victim may be able to pursue compensation from the responsible party. This is referred to as a crossover case. Crossover cases involve third-party claims filed as personal injury lawsuits in civil court.
In third-party claims, proof of negligence is required. If proof of negligence is established in court by a workers' compensation lawyer, compensation may be awarded for medical expenses, lost wages, rehabilitation costs, pain and suffering, and punitive damages. In most cases, compensation is paid either in a lump sum or according to a court-approved settlement arrangement.
Does Subrogation Affect the Injured Workers’ Claim?
What happens when an injured worker is collecting workers' compensation benefits for injuries and also wins a civil lawsuit against an at-fault third party? Can the injured worker keep both the workers' comp benefits and the damages award? Under subrogation, the employer and its insurance company have a right to recoup some money paid out in the third-party judgment.
In Iowa, subrogation works in two ways:
- When a worker is successful in a third-party lawsuit and wins a damage award, the worker's employer and its workers' compensation insurer have the right to recoup payment.
- When a worker does not take legal action against a third party, the worker's employer and its workers' compensation insurer can step into the injured worker's shoes and take legal action against the at-fault third party.
Subrogation can raise complex legal issues that may affect an injured worker's claim. Some rules impact how third-party damages are distributed between an employer and the employer's insurance provider.
If a workers’ compensation claim is still ongoing when the third-party claim is resolved, the workers’ compensation insurance provider may assert a subrogation claim to recover the amounts it has already paid, as well as a claim for amounts it may pay in the future.
If a third-party claim is resolved before the resolution of the workers’ compensation claim without the written permission of the workers’ compensation insurance provider, the workers’ compensation provider may claim that the injured worker elected a remedy and has forfeited the right to all workers’ compensation benefits.
The best way to completely and finally resolve a workers’ compensation subrogation claim is by completely and finally resolving the workers’ compensation claim. Due to the complex nature of many subrogation claims, especially when long-term medical treatments and disabilities are involved, it's best to seek advice from a workers' compensation attorney who can review the situation and prevent problems that may impact workers' compensation benefits.
Workers need to understand what benefits are available through workers' compensation. Injured workers may be able to recover compensation for medical bills and lost wages, as well as disability benefits. Workers' compensation benefits for work-related injuries are based on the nature of the accident, specific injuries, and the level of disability.
Understanding what subrogation means in workers' compensation can prevent problems that may impact a worker's compensation claim. In most cases, resolving a third-party claim while a workers' compensation claim is pending is not advised.